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Exhibit 2.1
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ASSET PURCHASE AGREEMENT
BY AND
AMONG
TRUSTWAY INSURANCE AGENCIES, LLC,
ASSURANCEAMERICA CORPORATION,
THOMAS-COOK HOLDING COMPANY
AND
JAMES C. COOK
DATED: JULY 20, 2004
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TABLE OF CONTENTS
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ARTICLE 1 -
DEFINITIONS................................................
1
ARTICLE 2 - SALE OF
ASSETS............................................. 5
2.1 Sale of Assets;
Assumption of Liabilities..................... 5
2.2 Purchase Price;
Payment....................................... 8
2.3 Conveyance and
Transfer, Assumption........................... 8
2.4 Closing
Date.................................................. 9
2.5 Further
Assurances............................................ 9
2.6 Allocation of
Purchase Price.................................. 9
2.7
Taxes.........................................................
9
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF
SELLER................... 9
3.1 Authority, No
Violation....................................... 9
3.2 Title to
Assets............................................... 10
3.3 Existence, Good
Standing and Authority........................ 10
3.4
Investments...................................................
10
3.5 Financial
Statements.......................................... 10
3.6 No Material
Changes........................................... 10
3.7 Real Property
and Leases...................................... 11
3.8 Material
Contracts............................................ 12
3.9 No
Conflict...................................................
14
3.10
Litigation....................................................
14
3.11 Tax Returns and
Payments...................................... 14
3.12
Liabilities...................................................
15
3.13
Insurance.....................................................
15
3.14 Compliance with Laws,
Governmental Authorizations............. 15
3.15
Employees.....................................................
16
3.16 Labor
Relations...............................................
16
3.17 Employee Benefit
Plans........................................ 16
3.18 Broker's or Finder's
Fees..................................... 18
3.19 Environmental and
Health and Safety Matters................... 18
3.20 Relationships with
Related Persons............................ 19
3.21
Accuracy......................................................
19
ARTICLE 4 - REPRESENTATIONS OF
PURCHASER............................... 19
4.1 Existence and
Good Standing of Purchaser...................... 19
4.2 Power and
Authority........................................... 19
4.3 Broker's or
Finder's Fees..................................... 20
4.4 No
Conflict...................................................
20
4.5
Litigation....................................................
20
4.6 Representations
and Warranties of Purchaser................... 20
4.7 Covenants of
Purchaser........................................ 20
ARTICLE 5 - PRE-CLOSING
COVENANTS...................................... 21
5.1 Full
Access...................................................
21
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5.2 Best
Efforts..................................................
21
5.3 Notices,
Consents and Approvals............................... 21
5.4 Operation of the
Business..................................... 21
5.5 Notice of
Developments........................................ 23
5.6
Exclusivity...................................................
24
5.7
Cooperation...................................................
24
5.8
Publicity.....................................................
24
ARTICLE 6 - POST-CLOSING
COVENANTS..................................... 24
6.1
Cooperation...................................................
24
6.2
Employees.....................................................
25
6.3
Non-Competition...............................................
26
6.4
Confidentiality...............................................
26
6.5 Retained
Liabilities; Assumed Contracts....................... 26
6.6 Tax
Matters...................................................
27
6.7 Books and
Records............................................. 27
6.8 Preparation of
Tax Returns.................................... 27
ARTICLE 7 - CONDITIONS TO PURCHASER'S
OBLIGATIONS...................... 27
7.1 Truth of
Representations and Warranties....................... 27
7.2 Covenants and
Agreements of Seller............................ 27
7.3 Good Standing
and Tax Certificates............................ 27
7.4 Secretary's
Certificate....................................... 28
7.5 No Litigation
Threatened...................................... 28
7.6 Approvals,
Filings............................................ 28
7.7 Opinion of
Counsel............................................ 28
7.8 Lease
Assignments.............................................
28
7.9 Sale and
Assignment Documents, Etc............................ 28
7.10 Material Contract
Consents.................................... 28
7.11 Required Governmental
Consents................................ 29
ARTICLE 8 - CONDITIONS TO SELLER'S
OBLIGATIONS......................... 29
8.1 Truth of
Representations and Warranties....................... 29
8.2 Covenants and
Agreements of Purchaser......................... 29
8.3 Good Standing
Certificates.................................... 29
8.4 Secretary's
Certificate....................................... 29
8.5 No Litigation
Threatened...................................... 29
8.6 Approvals;
Filings............................................ 29
8.7 Opinion of
Counsel............................................ 30
8.8 Promissory
Note............................................... 30
8.9 Employment
Agreement.......................................... 30
8.10
Deliveries....................................................
30
ARTICLE 9 - INDEMNIFICATION,
REMEDIES.................................. 30
9.1 Survival; Right
to Indemnification Not Affected by Knowledge.. 30
9.2
Definitions...................................................
30
9.3 Indemnification
by Seller..................................... 31
9.4 Indemnification
by Purchaser.................................. 31
9.5 Defense of Third
Party Actions................................ 32
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9.6
Miscellaneous.................................................
32
9.7 Time
Limitations; Limitations on Seller.......................
32
9.8 Limitations on
Amount-Seller.................................. 33
9.9 Procedure for
Indemnification-Other Claims.................... 33
9.10
Exclusivity...................................................
33
9.11
Set-off.......................................................
33
ARTICLE 10 -
MISCELLANEOUS.............................................
34
10.1
Termination...................................................
34
10.2
Expenses......................................................
34
10.3
Arbitration...................................................
34
10.4 Governing
Law................................................. 35
10.5 Enforcement;
Remedies......................................... 35
10.6 Captions;
References.......................................... 35
10.7 Variation in Pronouns,
Etc.................................... 35
10.8
Notices.......................................................
35
10.9 Parties in
Interest........................................... 36
10.10
Counterparts..................................................
36
10.11 Entire
Agreement..............................................
36
10.12
Amendments....................................................
37
10.13
Severability..................................................
37
10.14 Third Party
Beneficiaries..................................... 37
10.15 Joint
Preparation.............................................
37
10.16 Publicity and
Disclosures..................................... 37
10.17
Waiver........................................................
37
10.18 Bulk Sales
Law................................................ 37
10.19 Guarantee by Purchaser's
Parent............................... 37
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EXHIBITS AND SCHEDULES
Exhibit A
Equipment
Exhibit B
Excluded Assets
Exhibit C
Assumed Contracts
Exhibit D
Form of Promissory Note
Exhibit E
Form of Bill of Sale, Assignment and Assumption Agreement
Exhibit F
Form of Purchase Price Allocation
Exhibit G
Form of Opinion of Seller's Counsel
Exhibit H
Form of Lease Assignment
Exhibit I
Form of Opinion of Purchaser's Counsel
Schedule 3.2
Title to Assets; Inventory
Schedule 3.4
Investments
Schedule 3.6
No Material Change
Schedule 3.7(b) Real
Property Leases
Schedule 3.8
Material Contracts
Schedule 3.9
Contract Consents
Schedule 3.10
Litigation
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Schedule 3.12
Liabilities
Schedule 3.13
Insurance
Schedule 3.14
Required Governmental Authorizations
Schedule 3.15
Employees
Schedule 3.17
Employee Benefit Plans
Schedule 3.19(c) Environmental
and Health and Safety Matters
Schedule 3.20
Relationships with Related Persons
Schedule 4.4(b)
Consents
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ASSET PURCHASE AGREEMENT
THIS ASSET
PURCHASE AGREEMENT ("Agreement") is entered into as of July 20,
2004, by and among TRUSTWAY INSURANCE
AGENCIES, LLC, a Delaware limited
liability company ("Purchaser"),
THOMAS-COOK HOLDING COMPANY, a Georgia
corporation, ("Seller"), JAMES C. COOK, an
individual resident of the State of
Georgia ("Seller's Principal"), and
ASSURANCEAMERICA CORPORATION, a Nevada
corporation ("Purchaser's Parent").
W I T N E S S E T H:
WHEREAS,
the Seller is engaged in the business of operating an insurance
agency (including the representation of the
Smart Choice Agents Program of
Georgia) (the "Business"), through the
office (the "Office") located at 6165
Barfield Road, Suite 100, Atlanta,
Georgia.
WHEREAS,
Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, substantially all of
the assets, properties, and rights of
the Business.
NOW,
THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and
agreements of the parties hereinafter
contained, and for other good and valuable
consideration, the receipt and
sufficiency of which are hereby
acknowledged, and intending to be legally bound,
the parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
"Accounts" means all accounts receivable of
the Business, inclusive of future
premium income and finance charges, arising
from the operation of the Business
in the ordinary course.
"Acquisition Documents" means this
Agreement, all exhibits and schedules hereto,
and all agreements contemplated herein.
"Affiliate" is used in this Agreement to
indicate a relationship with one or
more persons and when used shall mean any
corporation, limited liability company
or other organization of which such person
is an executive officer, manager,
director, member or partner or is directly
or indirectly the beneficial owner of
five percent (5%) or more of any class of
equity securities or financial
interest therein; or a person that
directly, or indirectly through one or more
intermediaries, controls or is controlled
by, or is under common control with,
the person specified.
"Agreement" means this Asset Purchase
Agreement.
"Assets" means all of the assets, tangible
and intangible, owned by Seller
including, but not limited to, Equipment
and rights in the Assumed Contracts,
used in or associated with the
Business.
"Assumed Contracts" has the meaning set
forth in Section 2.1(c)(i).
"Business" has the meaning set forth in the
recitals.
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"Business Employees" has the meaning set
forth in Section 3.15(a).
"Carrier Contracts" has the meaning set
forth in Section 3.8.
"Carriers" has the meaning set forth in
Section 3.8.
"Claim" or "Claims" have the meanings set
forth in Section 2.1(c)(ii).
"Claim Notice" has the meaning set forth in
Section 9.9.
"Closing" has the meaning set forth in
Section 2.5.
"Closing Balance Sheet" has the meaning set
forth in Section 2.1(a)(i).
"Closing Date" has the meaning set forth in
Section 2.4.
"Closing Payment" has the meaning set forth
in Section 2.2(b).
"COBRA" has the meaning set forth in
Section 3.19(f).
"Code" means the Internal Revenue Code of
1986 or any successor law, and
regulations issued by the IRS pursuant to
the Internal Revenue Code or any
successor law.
"Competing Business" has the meaning set
forth in Section 3.20.
"Contract" means any agreement, contract,
instrument, obligation, promise,
commitment or undertaking (whether written
or oral and whether express or
implied) that is legally binding.
"Contract Consents" has the meaning set
forth in Section 3.9(b).
"Employee Benefit Plans" shall have the
meaning set forth in Section 3.17(a).
"Encumbrance" means any charge, claim,
community property interest, condition,
covenant, equitable interest including any
equitable servitude, lien, option,
pledge, security interest, right of first
refusal, defect in title, or
restriction of any kind, including any
restriction on use, voting, transfer,
receipt of income, or exercise of any other
attribute of ownership.
"Environmental and Safety Requirements"
means all federal, state, provincial and
municipal statutes, regulations, common law
and similar provisions having force
or effect of law, all orders, permits,
licenses and approvals with respect to
environmental, public health and safety,
occupational health and safety, product
liability and transportation including,
without limitation, all such standards
of conduct or bases of obligations relating
to the presence, use, production,
generation, handling, transportation,
treatment, storage, disposal,
distribution, labeling, testing,
processing, discharge, release, control or
cleanup of any contaminant, waste,
hazardous materials, substances, chemical
substances or mixtures, pesticides, toxic
chemicals, petroleum products or
byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
"Equipment" has the meaning set forth in
Section 2.1(a)(iii).
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"ERISA" means the Employee Retirement
Income Security Act of 1974 or any
successor law, and regulations and rules
issued pursuant to that Act or any
successor law.
"Excluded Assets" has the meaning set forth
in Section 2.1(b).
"Governmental Authorization" means any
approval, consent, license, permit,
waiver, or other authorization issued,
granted, given, or otherwise made
available by or under the authority of any
Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" means any federal,
state, provincial, local, municipal,
foreign, or other government or
jurisdiction (including any governmental agency,
branch, department, official, or entity and
any court or other tribunal).
"Historical Financial Statements"
has the meaning set forth in Section 3.5
"Indemnification Cap" has the meaning set
forth in Section 9.8(a).
"Indemnified Person" has the meaning set
forth in Section 9.2
"Indemnifying Person" has the meaning set
forth in Section 9.2.
"Insurance Policies" has the meaning set
forth in Section 3.13.
"IRS" means the Internal Revenue
Service.
"Knowledge" means (i) with respect to an
individual, such individual has actual
personal knowledge of the matter of fact in
question, (ii) with respect to
Seller or Purchaser, a member of senior
management has actual personal knowledge
of such matter or fact or a member of
senior management has information from
which a person of reasonable intelligence
would reasonably infer that the matter
or fact exists or (iii) with respect to the
Seller who are trusts, the trustees
and beneficiaries of such trusts who have
personal knowledge of the matter or
fact in question.
"Lease" or "Leases" have the meanings set
forth in Section 3.7(b).
"Lease Assignment" has the meaning set
forth in Section 7.8.
"Legal Requirement" means any federal,
state, local, municipal, foreign,
international, multinational, or other
administrative order, constitution, law,
ordinance, principle of common law,
regulation, statute, or treaty relating to
the operation of the Business.
"Losses" has the meaning set forth in
Section 9.2.
"Material Adverse Effect" means, with
respect to either of the Seller or
Purchaser or any other entity, any event,
condition or change which materially
and adversely affects or may materially and
adversely affect the business,
financial condition, prospects, assets or
results of operations of such company.
"Material Contract Consents" has the
meaning set forth in Section 7.10.
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"Office" has the meaning set forth in the
recitals.
"Order" means any award, decision,
injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made,
or rendered by any court,
administrative agency, or other
Governmental Body or by any arbitrator.
"Organizational Documents" means (a) the
articles or certificate of
incorporation and the bylaws of a
corporation; (b) any charter or similar
document adopted or filed in connection
with the creation, formation, or
organization of a Person; and (c) any
amendment to any of the foregoing.
"Person" means any individual, corporation
(including any non profit
corporation), general or limited
partnership, limited liability company, joint
venture, estate, trust, association,
organization, labor union, or other entity
or Governmental Body.
"Promissory Note" has the meaning set forth
in Section 2.2(b)(i).
"Promissory Note Amount" has the meaning
set forth in Section 2.2(b)(i).
"Purchased Assets" has the meaning set
forth in Section 2.1(a).
"Purchase Price" has the meaning set forth
in Section 2.2(a).
"Purchaser" has the meaning set forth in
the heading of this Agreement.
"Purchaser's Indemnified Persons" has the
meaning set forth in Section 9.2.
"Required Governmental Authorizations" has
the meaning set forth in Section
3.14.
"Retained Liabilities" has the meaning set
forth in Section 2.1(c)(ii).
"Schedule" or "Schedules" mean any
schedule(s) delivered by Seller, or Purchaser
pursuant to, and referred to in, Article
III or IV of this Agreement.
"Seller" has the meaning set forth in the
heading of this Agreement.
"Seller's Indemnified Persons" has the
meaning set forth in Section 9.2.
"Severance and Change in Control Payments"
means the aggregate amount of cash
payments required to satisfy in full
Seller's obligations under any severance,
employment, consulting, change in control
or similar agreement in force as of
the date hereof upon the consummation of
the transactions contemplated hereby.
"Tax" or "Taxes" means any
federal, state, provincial, local or foreign income
tax including, without limitation, any tax
on gross income, net income,
franchise, gross receipts, royalty, capital
gains, value added, sales, goods and
services, commodity, harmonized, use,
health, education, social service, excise,
property, ad valorem, transfer, license,
use, profits, windfall profits,
environmental, withholding on amounts paid
to or by Seller, payroll, employment,
disability, employee's income withholding,
workers' compensation, employment
insurance, unemployment insurance, social
insurance, health insurance, social
security, excise, severance, stamp,
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occupation, premium, gift or estate, levy,
assessment, tariff, duty, deficiency,
or other fee, and any related charge or
amount (including any fine, penalty,
interest, or addition to tax), imposed,
assessed, or collected by or under the
authority of any Governmental Body or
payable pursuant to any tax sharing
agreement or any other Contract relating to
the sharing or payment of any such
tax, levy, assessment, tariff, duty,
deficiency, or fee.
"Tax Return" means any return (including
any information return), declaration
report, statement, schedule, notice, form,
claim for refund, or other document
or information filed with or submitted to,
or required to be filed with or
submitted to, any Governmental Body in
connection with the determination,
assessment, collection, or payment of any
Tax or in connection with the
administration, implementation, or
enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Third Party Action" has the meaning set
forth in Section 9.2.
ARTICLE 2 - SALE OF ASSETS
2.1 Sale
of Assets; Assumption of Liabilities.
(a) Upon the terms and subject to the conditions contained in
this
Agreement,
at the Closing (as defined in Section 2.4 below), Seller shall
sell, assign,
transfer and convey to Purchaser, and Purchaser shall
purchase,
acquire and accept from Seller, the Business as a going
concern,
including
all of Seller's assets of every kind and description, other
than
the
Excluded Assets (as defined in subsection (b) below) (the
"Purchased
Assets"),
and subject only to the liabilities and obligations of Seller
which are
defined in subsection (c) as the "Assumed Contracts". The
Purchased
Assets shall include, without limitation, the following assets
and
properties of the Business:
(i) all assets used in the Business on the Closing Date and
reflected on the balance sheet of the Business dated as of June
30,
2004 (the "Closing Balance Sheet"), with only such changes
therein
as have occurred in the ordinary course of the Business since
the
date of such balance sheet;
(ii) the rights of Seller under the Assumed Contracts;
(iii) the machinery, equipment, equipment leases, fixtures and
furniture, and office supplies related to the Business listed
on
Exhibit A (the "Equipment");
(iv) All leasehold interests used in the Business;
(v) subject to the Contract Consents and the Lease
Assignments, all rights and interests of Seller in and to any
Contracts, including Carrier Contracts, contracts for the
purchase
of materials, supplies and services and the sale of products
and
services, equipment leases and any other contract related to
the
Business;
(vi) all of Seller's books, records and other data relating to
its Business;
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(vii) all of the Business' goodwill, dealer and customer
lists, sales and marketing information, and all know how,
technology, drawings, software and other intangible assets of
the
Business;
(viii) all permits, licenses, and approvals of all federal,
state, local or foreign governmental or regulatory authorities
or
industrial bodies which are related to the Business, to the
extent
the same are transferable;
(ix) all rights of Seller to causes of action, lawsuits,
judgments, claims and demands of any nature related to the
Business;
(x) all present and future insurance proceeds of Seller
related to the Business which may be payable under the
Insurance
Policies listed on Schedule 3.13 attached hereto; and
(xi) except for Excluded Assets, all other items of property,
real or personal, tangible or intangible, including without
limitation all computer programs, tapes and discs and other
intellectual property owned, used by or accruing to the benefit
of
the Business.
(b) Notwithstanding any provision contained herein to the
contrary,
the
Purchased Assets shall not include, and Seller will retain
ownership
of, the
following assets (collectively, the "Excluded Assets"):
(i) all cash, cash equivalents, and securities;
(ii) Seller's minute and stock record books, journals, ledgers
and books of original entry; provided, however, that Seller
shall
provide Purchaser prior to, and following, the Closing with
access
to each of the foregoing;
(iii) all premiums, trade and other accounts receivable and
other indebtedness related to the Business, and including the
benefit of all collateral, security, guaranties, and similar
undertakings received or held in connection therewith, on the
Closing Date (the "Accounts");
(iv) the corporate name Thomas-Cook Holding Company;
(v) Seller's 2002 BMW X5;
(vi) Bonuses earned by Seller with respect to the Business
during the 2004 calendar year;
(vii) One computer, one computer monitor, one office chair and
personal items of the employees of Seller located at the Office
of
Seller;
(viii) Seller's rights under this Agreement; and
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(ix) those assets of Seller unrelated to the Business set
forth on
Exhibit B.
(c) (i) Purchaser does not and shall not assume or agree to
assume
the
liabilities and obligations of Seller of any nature, direct,
contingent
or otherwise, except all liabilities and obligations with
respect to
the performance under the Contracts assumed by Purchaser listed
on Exhibit
C (the "Assumed Contracts") at the Closing from and after the
Closing
Date.
(ii) Except for the Assumed Contracts, Purchaser shall not
assume or be bound by any obligations or liabilities of Seller
of
any kind or nature, known, unknown, accrued, absolute, contingent
or
otherwise, whatsoever, all of which shall be retained by Seller
(the
"Retained Liabilities"). Except for the Assumed Contracts,
Seller
shall be responsible for and pay any and all losses, damages,
obligations, liens, assessments, judgments, fines, disposal and
other costs and expenses, liabilities and claims, including,
without
limitation, interest, penalties and fees of counsel, as the same
are
incurred, of every kind or nature whatsoever (all the foregoing
being a "Claim" or the "Claims"), made by or owed to any person
to
the extent any of the foregoing relates to the Retained
Liabilities
which shall include, without limitation, claims relating to (A)
Seller's operations and assets unrelated to the Business, (B)
the
Excluded Assets,
(C) any employees or Employee Benefit Plans of
Seller, except for liabilities and obligations arising solely out
of
the employment of such persons by Purchaser after the Closing
Date
or (D) any Taxes of Seller arising out of or relating to any
period
on or prior to the Closing Date or any activity of Seller prior
to
or after the Closing Date, (E) any indebtedness for borrowed
money
of Seller, and (F) the operations or assets of the Business
arising
in connection with or on the basis of events, acts, omissions,
conditions or any other state of facts occurring or existing
prior
to or on the Closing Date (including, in each case, without
limitation, any Claim relating to or associated with product
liability matters, tax matters, pension and benefit matters,
any
failure to comply with applicable laws and/or permitting or
licensing requirements, personal injury and property damage
matters
and environmental and worker health and safety matters).
(iii) The assumption of the Assumed Contracts by Purchaser
hereunder shall be treated as independent of Purchaser's
existing
business and shall not enlarge any rights of third parties
under
contracts or arrangements with Purchaser or Seller or any of
their
respective affiliates or subsidiaries. Nothing herein shall
prevent
Purchaser from contesting in good faith any of the Assumed
Contracts; provided, however, no such contest by Purchaser
shall
relieve Purchaser of its indemnification obligations under
Section
9.4 hereof. Nothing herein shall prevent Seller from contesting
in
good faith any of the Retained Liabilities; provided, however,
no
such contest by Seller shall relieve Seller of its
indemnification
under Section 9.3 hereof.
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2.2
Purchase Price; Payment.
(a) As consideration for the purchase of the Purchased Assets,
Purchaser
shall pay to Seller, the aggregate sum (the "Purchase Price")
of
Two
Million, Two Hundred Thousand U.S. Dollars ($2,200,000) allocated
as
follows:
(i) $1,300,000.00 for the portion of the Business known as
"Insurance Market" and
(ii) $900,000.00 for the portion of the Business known as
"Smart Choice Agents Program of Georgia".
(b) At the Closing,
(i) Purchaser shall deliver:
(A) by check, the amount of four hundred sixty two
thousand U.S. Dollars ($462,000) (the "Closing Payment") to
Seller.
(B) its promissory note in substantially the form of
Exhibit D attached hereto (carrying an interest rate equal to
eight percent (8%) per annum (the "Promissory Note") in the
amount of One Million, Seventy Eight Thousand U.S. Dollars
($1,078,000) (the "Promissory Note Amount"). The Promissory
Note will be payable over a three-year period. Interest to be
paid quarterly and principal annually.
(ii) Balance of the Purchase Price to be paid with 1,320,000
shares of AssuranceAmerica Corporation common stock (the
"Common
Stock") issued to Seller at the Closing.
(iii) Notwithstanding the foregoing, in the event that
Worldwide Insurance Network, Inc. exercises its right of refusal
to
purchase the portion of the Business known as "Smart Choice
Agents
Program of Georgia," the Seller shall not be obligated to sell
such
portion of the Business to Purchaser and the Purchase Price shall
be
reduced to $1,300,000 with the Closing Payment reduced to
$273,000,
the
Promissory Note reduced to $637,000 and the Common Stock
reduced
to 780,000 shares.
2.3
Conveyance and Transfer, Assumption. At the Closing, and subject
to
the terms and conditions hereof, Seller
hereby agrees that it will execute and
deliver to Purchaser, and Purchaser will
execute and deliver to Seller a Bill of
Sale, Assignment and Assumption Agreement,
in the form of Exhibit E hereto, and
such other bills of sale, deeds,
endorsements, assignments, releases, and other
good and sufficient instruments of
transfer, assignment, and conveyance, in form
reasonably satisfactory to Purchaser and
its counsel, as shall be effective to
convey to Purchaser good and merchantable
title in and to the Purchased Assets.
Simultaneously
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with such delivery, Seller will take all
steps necessary to put Purchaser in
actual possession of the Purchased
Assets.
2.4
Closing Date. The Closing under this Agreement (the "Closing")
shall
be held on July 31, 2004 or such other date
as Purchaser and Seller may agree to
in writing, at the offices of Womble
Carlyle Sandridge & Rice, PLLC, 3500 One
Atlantic Center, 1201 West Peachtree
Street, Atlanta, Georgia, and shall be
effective as of July 31, 2004; such
effective date is herein referred to as the
"Closing Date."
2.5
Further Assurances. Seller hereby agrees that, from time to time,
at
Purchaser's request and without further
consideration, Seller will execute and
deliver to Purchaser such other and further
instruments of conveyance,
assignment and transfer and take such other
action as Purchaser may reasonably
require to more effectively convey,
transfer, and assign to Purchaser, and to
put Purchaser in possession of, the
Purchased Assets.
2.6
Allocation of Purchase Price.
(a) The Purchase Price allocated to the Purchased Assets shall
be
allocated
among the Purchased Assets in accordance with the methodology
set forth
on Exhibit F.
(b) Seller and Purchaser shall be bound by such allocations for
all
purposes
and to account for and report the purchases and sales
contemplated hereby for all financial, accounting and Tax purposes
in
accordance
with such allocations.
2.7 Taxes.
Notwithstanding anything in this Agreement to the contrary,
Purchaser shall not have any liability or
responsibility for any Tax of any kind
relating to or arising out of the
transactions contemplated by this Agreement
and Seller shall be solely responsible for
the payment of Tax of any kind,
arising out of the sale, transfer, and
assignment of the Purchased Assets.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and
Seller's Principal represent and warrant to Purchaser as
follows:
3.1
Authority, No Violation. Seller has all requisite power and
authority
to enter into the Acquisition Documents to
which Seller is a party and to carry
out the transactions contemplated thereby.
The execution, delivery and
performance of the Acquisition Documents to
which Seller is a party have been
duly and validly authorized and approved by
all necessary action by Seller. Each
of the Acquisition Documents to which
Seller is a party constitutes the legal
and binding obligation of Seller,
enforceable against it in accordance with
their respective terms, subject to
applicable laws of bankruptcy, insolvency,
moratorium and other laws affecting the
rights of creditors generally and to
general principles of equity. The entering
into of the Acquisition Documents to
which Seller or Seller's Principal are a
party does not, and the consummation by
Seller and Seller's Principal of the
transactions contemplated thereby,
including specifically the transfer of the
Purchased Assets to Purchaser by
Seller, will not violate the provisions of
(a) any applicable Legal Requirement,
(b) Seller's Organizational Documents, or
(c) any provision of, or result in a
default or acceleration of any obligation
under, or result in any change in the
rights or obligations of Seller under, any
Encumbrance, agreement, license,
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instrument, indenture, order, arbitration
award, judgment, or decree to which
Seller is a party or by which any of them
is bound, or to which any property of
Seller is subject.
3.2 Title
to Assets. Seller has good and marketable title to, or a valid
leasehold interest in, all of the Purchased
Assets, free and clear of all
Encumbrances and the sale and delivery of
the Purchased Assets by Seller to
Purchaser pursuant hereto shall vest in
Purchaser good and marketable title
thereto, free and clear of any and all
Encumbrances on any of the Purchased
Assets, other than as disclosed in Schedule
3.2 hereto or as may be created by
Purchaser. Seller shall, prior to the
Closing, use its best efforts to cure at
its expense any Encumbrance identified by
Purchaser. There is no material asset
used or required by Seller in the conduct
of the Business which is not included
in the Purchased Assets or licensed or
leased to it pursuant to one of the
Contracts assigned to Purchaser
hereunder.
3.3
Existence, Good Standing and Authority. Seller is a corporation
duly
organized, validly existing and in good
standing under the laws of the
jurisdiction of its formation. Seller has
the power to own its properties and to
carry on its business as now being
conducted. Seller is duly qualified to do
business in all jurisdiction(s) in which
the character or location of the
properties owned or leased by it or the
nature of the business conducted by it
makes such qualification necessary, except
where the failure to so qualify would
not have a Material Adverse Effect. Exhibit
A sets forth each operating location
of the Business. Seller has provided to
Purchaser true and complete copies of
all of the Organizational Documents of
Seller.
3.4
Investments. Other than as disclosed in Schedule 3.4, Seller does
not
own, directly or indirectly, any capital
stock or other equity, ownership or
proprietary interest in any other
corporation, partnership, association, trust,
joint venture or other entity.
3.5
Financial Statements. Seller has heretofore furnished Purchaser
with
the following financial statements of the
Business: (i) unaudited balance sheets
dated as of December 31, 2002 and December
31, 2003 and the related statements
of operations and income statements for the
years then ended, and (ii) the
unaudited interim balance sheets of June
30, 2004 (collectively, the "Historical
Financial Statements"). The Historical
Financial Statements are true and correct
in all material respects and fairly present
the financial position of the
Business at the respective dates
thereof.
3.6 No
Material Changes.
(a) Except as set forth on Schedule 3.6 or the Historical
Financial
Statements, since June 30, 2004 there has not been:
(i) any material adverse change in the business, operations,
properties, assets or condition (financial or other), of the
Business or any event which has had or could reasonably be
expected
to have a Material Adverse Effect on the business, operations,
properties, assets or condition (financial or other), results
of
operations, prospects of the Business and, to Seller's Knowledge,
no
factor or condition exists which could reasonably be expected
to
result in any such material adverse change (provided that
seasonal
fluctuations consistent with the Business' past results shall not
be
deemed to
be a material adverse change);
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(ii) any damage, destruction or similar loss, whether or not
covered by insurance, materially adversely affecting the Business
or
the Purchased Assets;
(iii) any material change in business policies or practices or
accounting methods, conventions, principles or assumptions of
the
Business except as relates to the transactions contemplated
herein;
or
(iv) any material adverse change in the nature of the business
relationships of the Business with any of its customers or
suppliers.
(b) Since June 30, 2004, except as otherwise permitted or
contemplated in this Agreement or as set forth on Schedule 3.6,
Seller has
not, with
respect to the Business:
(i) entered into any material transaction other than in the
ordinary course of business and consistent with past practices
or
conducted the Business other than in its usual manner;
(ii) incurred any material obligation or liability (including
any guaranty, indemnity, agreement for or with respect to any
obligation or liability of another person) or paid, satisfied
or
discharged any material obligation or liability prior to the
due
date or maturity thereof, except current obligations and
liabilities
in the ordinary course of business and consistent with past
practice, other than non recurring liabilities and those
obligations
and liabilities which will be paid at Closing;
(iii) sold, assigned, pledged, mortgaged, leased or
transferred any of the Assets or any interest therein, or
created,
incurred, assumed, granted or suffered to exist any Encumbrance
(which remains in existence on the Closing Date) on any of the
Purchased Assets or any interest therein, except, in each case,
in
the ordinary course of business and consistent with past
practice;
(iv) waived any right of value or canceled, forgiven or
discharged any debt owed to it or claim in its favor except in
the
ordinary course of business and consistent with past practice;
(v) increased the compensation or fringe benefits payable to
any of its employees in a manner which is inconsistent with
past
practice; or
(vi) entered into any agreement to do any of the foregoing.
3.7 Real
Property and Leases.
(a) The Purchased Assets do not include any owned real
property.
(b)
Schedule 3.7(b) contains a true and complete list of all real
property
leases and subleases (each a "Lease", and collectively, the
"Leases")
(i) to which Seller is a party or (ii) to be acquired by or
assigned
to Purchaser prior to the Closing Date, in each case specifying
the name
of the lessor or sublessor, the lease term, the basic annual
rental
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and other
amounts paid or payable with respect thereto and any purchase
options
exercised or exercisable by Seller. Except as set forth on
Schedule
3.7(b), with respect to each Lease:
(i) correct and complete copies thereof have been delivered to
Purchaser;
(ii) the Lease is legal, valid, binding, enforceable, and in
full force and effect and will continue to be so on identical
terms
following the consummation of the transactions contemplated
hereby;
(iii) no party to the Lease is in breach or default, and no
event has occurred which, with notice or lapse of time or both,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder or which would prevent
the
exercise by the Seller of any right to renew or extend such
lease;
(iv) no party to the Lease has repudiated any provision
thereof, and there are no disputes, oral agreements, or
forbearance
programs in effect as to the Lease;
(v) with respect to each sublease, the representations and
warranties set forth in subsections (ii), (iii) and (iv) above
are
true and correct with respect to the underlying lease;
(vi) Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(vii) Seller has received no notice regarding violations of
any Legal Requirements on any property subject to a Lease; and
(viii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities.
Subject to receipt of any required consents
or approvals, the consummation of
the transactions contemplated by this
Agreement will not result in the
termination of any Lease, and immediately
after the Closing, all Leases will
continue in full force and effect without
the imposition of any additional
burdensome condition or obligation on
Purchaser resulting from the consummation
of the transactions contemplated
hereby.
3.8
Material Contracts.
(a) Set forth on Schedule 3.8, is a complete list of all of the
following
Contracts relating to the Business which Seller is a party or
by
which it
is bound:
(i) all Contracts relating to the employment of any person,
and all bonus, deferred compensation, pension, profit sharing,
stock
option, employee
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stock purchase, phantom stock, retirement, severance benefits
retirement, stock appreciation and other employee benefit
plans;
(ii) all Contracts relating to capital expenditures;
(iii) all loan agreements, indentures, notes, bonds,
debentures or any other document or agreement evidencing a
capitalized lease obligation or indebtedness to any Person and
all
loans, advances to, and investments in, any other Person, and
all
Contracts relating to the making of any such loan, advance or
investment;
(iv) all guarantees and other contingent liabilities with
respect to any indebtedness or obligation of any other Person
(other
than the endorsement of negotiable instruments for collection in
the
ordinary course of business);
(v) all management services, consulting and any other similar
type contracts;
(vi) all leases of personal property;
(vii) all Contracts limiting the freedom of Seller to engage
in any line of business or to compete with any other Person;
(viii) all Contracts not entered into in the ordinary course
of business;
(ix) all Contracts which involve the receipt of or expenditure
by Seller of more than $25,000 in any one year;
(x) any license agreement (as licensor or licensee);
(xi) any Contract with any shareholder, manager, director,
officer or employee of Seller;
(xii) All contracts ("Carrier Contracts") between Seller and
insurance carriers ("Carriers") relating to Seller operating as
an
agent for a Carrier relating to the Business; and
(xiii) all other Contracts material to the operation of the
Business or the Purchased Assets.
(b) Each Contract set forth on Schedule 3.8 is a valid and
binding
agreement
of Seller and, to Seller's Knowledge, of all other parties
thereto and is in full
force and effect and enforceable in accordance with
its terms.
Seller has not violated any of the terms or conditions of any
of the
Contracts set forth on Schedule 3.8, and, to the Knowledge of
Seller,
all of the terms and conditions to be performed by any party
thereto
other than Seller have been fully performed. There exists no
default or
event of default under any of the Contracts set forth on
Schedule
3.8 or event, occurrence, condition or act (including the
purchase
of the Purchased Assets hereunder) which, with the giving of
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notice,
the lapse of time or the happening of any other event or
condition,
would become a default or event of default thereunder. True and
complete
copies of all such Contracts have been made available to
Purchaser
by Seller.
3.9 No
Conflict.
(a) Neither the execution and delivery of this Agreement nor
the
consummation or performance of the transactions contemplated herein
will,
directly
or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of Seller;
(ii) contravene, conflict with, or result in a violation of,
any Legal Requirement, Governmental Authorization, or any Order
to
which Seller or any of the Purchased Assets are bound or
subject;
(iii) Except as provided in Schedule 3.9, contravene, conflict
with, or result in a violation or breach of any provision of, or
to
accelerate the maturity or performance of, or to cancel,
terminate,
or modify, any Contract; or
(iv) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Purchased Assets.
(b) Except as set forth on Schedule 3.9, Seller is not required
to
give any
notice to or obtain any consent (the "Contract Consents") from
any Person
in connection with the execution and delivery of this Agreement
or the
consummation or performance of any of the transactions
contemplated
hereby.
3.10
Litigation. Except as set forth on Schedule 3.10, there is no
proceeding, investigation or litigation by
any Person, or by or before any
Governmental Body, pending or, to the
Knowledge of Seller, threatened, against
or affecting (i) Seller, the Business or
the Purchased Assets, or (ii) the
transactions contemplated hereby. Seller is
not subject or a party to any Order.
3.11 Tax
Returns and Payments.
(a) All of the Tax Returns of Seller required by law to be filed
on
or before the date hereof have
been duly and timely filed, and all Taxes
owed by
Seller (whether or not shown on such Tax Return) have been
paid.
All such
Tax Returns were correct and complete in all material respects.
No claim
has ever been made by an authority in a jurisdiction where
Seller
does not
file Tax Returns that the Business is or may be subject to the
imposition
of any Tax by that jurisdiction. There are no Encumbrances on
any of the
assets of Seller that arose in connection with any failure (or
alleged
failure) to pay any Tax.
(b) There are in effect no waivers of any applicable statute of
limitations in respect of Taxes nor any extensions of time with
respect to
a Tax
assessment or deficiency.
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(c) Seller has withheld and paid all Taxes required to have
been
withheld
and paid in connection with amounts paid or owing to any
employee,
consultant, independent contractor, creditor, stockholder, or
other
third party.
(d) Seller is not a party to any Tax allocation or sharing
agreement.
Seller (i) has not been a member of an Affiliated Group (as
defined by
Section 1504 of the Code) filing a consolidated federal income
Tax Return
or (ii) has no liability for the Taxes of any Person under
Treas.
Reg. Section 1.1502 6 (or any similar provision of state, local,
or
foreign
law), as a transferee or successor by contract or otherwise.
(e) No liability for any Tax will be imposed upon the Purchased
Assets or
Seller or its other assets with respect to any period before
the
Closing
Date. Seller is not subject to any open audit in respect of its
Taxes, no deficiency assessment or
proposed adjustment for Taxes is
pending,
and Seller has no Knowledge of any liability, whether or not
proposed,
for any Tax with respect to any period through the date hereof
to be
imposed upon any of the Seller's properties or assets. Seller is
not
aware of
any dispute or claim concerning any liability for Taxes of
Seller.
3.12
Liabilities. Except as set forth on Schedule 3.12, Seller has no,
and
none of the Purchased Assets is subject to,
any outstanding claims, liabilities
or indebtedness, accrued, contingent or
otherwise, and whether due or to become
due, relating to the Business
